Avoid Payday Loan Scams
Contrary to what some believe payday lending is not a scam, but not every so-called payday lender operates legally and legitimately. So today let’s talk about how you can make sure you’re dealing with the right payday lenders.
Make Sure the Lender Has a State License
State law requires that direct payday lenders get licensed. The license authorizes the business to lend in the state and subjects them to laws related to payday lending. If they don’t follow the rules, the lenders lose their licenses. If you run into a problem with a loan, you’ll have greater recourse if you dealt with a licensed business in your state. Illegitimate loan companies will try and operate without a license to avoid complying with state loan regulations.
Make Sure Lenders Make Fees and Costs Clear
Anytime, you sign important documents you should read the terms carefully and ask questions if anything is unclear. Don’t sign any paperwork until you know exactly what you’re committing to. If the lender doesn’t give you straight answers, move onto another one. There are plenty of payday lenders so keep looking until you find one you’re comfortable with.
Know Your State’s Fee Limits
States usually have a limit on how much a lender can charge you for every $100 you borrow. If you know the limits beforehand, you’ll be able to determine the legitimate lenders and those who aren’t following the guidelines. Don’t feel obligated to accept a loan that exceeds the maximum fee levels.
Hold Unto Your Money Until You Get the Loan
Payday loan scammers may also try and get you to pay money upfront for unnecessary fees. These can include application fees, tax fess or other “hidden” fees. Refuse to pay anything until you actually receive the loan. Most legitimate payday lenders include fees and interest charges in your repayment(s).
Make Sure You Can Communicate With Your Lender
Communication is vital to any business transaction and there may be times when you need to discuss your loan with customer a real live person. Before accepting a loan, find out how you can contact the company. Preferably, you need a means of contact beyond email. If you’re not working with a lender in a physical location, you can still ask for their physical address. That way you’ll know if they operate in the U.S. and have to follow federal and state laws.
Check the Lender’s Standing with the Better Business Bureau
The Better Business Bureau, also know as the BBB, keeps companies in line. It makes sure they operate properly by logging consumer complaints into their database. Though not full proof, this overview gives you an idea of how the company treats its customers and addresses problems. The database shows you the number of complaints and if and how the company resolved it. The BBB also gives the business a rating.
If the business is not in the BBB database, it means one of two things. It has no complaints or it’s not a U.S. business. If the lender does not show up in the database, you’ll have to do a little more research to determine the reason.
Be Aware of Collection Scams
Some scammers will also pose as collection agencies, providing official sounding name, like the (Your County) Fraud Department. They will try and get you to make a payment over the phone or get your banking or credit card information – even if you’ve already paid off the loan. They may also call a family member that you listed as a reference. If you suspect fraud, call the proper authorities to verify the agency.
Also, never make a payment on your loan over the phone if someone calls you. Always, refer back to the contact information you received from the lender at the time of your loan. Call this number if you need to deal directly with the company about payments or other collection issues.
Do Your Due Diligence
Scams happen in almost every type of business. However, a few minutes on the Internet can provide you a lot of information on how consumers view certain companies. Of course, you can’t trust everything you read on the Internet, but you can get some valuable information for making an informed decision.
Your ability to compare different lenders and loans through a site like ours also protects you and offers you the opportunity to find the best available payday loans. As you review offers, you can quickly and easily figure out which ones have the best terms and rates – and the lenders you feel most comfortable working with.